A U.S. parent owns all of the stock of an Italian subsidiary. The subsidiary's January 1 and December 31, 2020 trial balances are as follows, in euros:

December 31, 2020 January 1, 2020

Dr (Cr)Dr (Cr)

Cash, receivables 180,000 200,000

Inventories at FIFO cost 500,000 400,000

Plant & equipment, net 1,300,000 1,600,000

Liabilities (1,080,000) (1,400,000)

Capital stock (200,000) (200,000)

Retained earnings, beginning (600,000) (600,000)

Dividends 100,000

Sales revenue (4,000,000)

Cost of goods sold 2,300,000

Depreciation expense 300,000

Out of pocket expenses 1,200,000

0 0

Sales, purchases, and recurring out of pocket expenses occurred evenly throughout the year. Exchange rates ($/) are:

January 1, 2020 $ 1.45

Average for 2020 $ 1.35

Rate when dividends declared $ 1.32

December 31,2020 $1.30

Question 7.3: Assume the subsidiary's functional currency is euro. What is the translation gain or loss for 2020?

Question 7.4Assume the subsidiary's functional currency is the U.S. dollar. What is the remeasurement gain or loss?